Question 1

Which of the following shifts aggregate supply to the right?

Accepted Answer

A)  a decline in the price of imported natural resources 
B)  a technological advance 
C)  an older labor force that leaves jobs less frequently 
D)  All of the above are correct. 
A)  a decline in the price of imported natural resources 
B)  a technological advance 
C)  an older labor force that leaves jobs less frequently 
D)  All of the above are correct.

Question 2

Moving from the late 1960s to 1970-1973,

Accepted Answer

A)  inflation remained high while the unemployment rate was lower than in the late 1960s. 
B)  inflation remained high while the unemployment rate was higher than in the late 1960s. 
C)  inflation remained low while the unemployment rate was lower than in the late 1960s. 
D)  inflation remained low while the unemployment rate was higher than in the late 1960s. 
A)  inflation remained high while the unemployment rate was lower than in the late 1960s. 
B)  inflation remained high while the unemployment rate was higher than in the late 1960s. 
C)  inflation remained low while the unemployment rate was lower than in the late 1960s. 
D)  inflation remained low while the unemployment rate was higher than in the late 1960s.

Question 3

The restrictive monetary policy followed by the Fed in the early 1980s

Accepted Answer

A)  reduced both unemployment and inflation. 
B)  reduced inflation significantly, but at the cost of a severe recession. 
C)  reduced unemployment significantly, but at the cost of higher inflation. 
D)  raised both unemployment and inflation. 
A)  reduced both unemployment and inflation. 
B)  reduced inflation significantly, but at the cost of a severe recession. 
C)  reduced unemployment significantly, but at the cost of higher inflation. 
D)  raised both unemployment and inflation.

Question 4

The long-run Phillips curve would shift left if

Accepted Answer

A)  the money supply increased or if the minimum wage was reduced. 
B)  the money supply increased but not if the minimum wage was reduced. 
C)  the minimum wage was reduced but not if the money supply increased. 
D)  None of the above is correct. 
A)  the money supply increased or if the minimum wage was reduced. 
B)  the money supply increased but not if the minimum wage was reduced. 
C)  the minimum wage was reduced but not if the money supply increased. 
D)  None of the above is correct.

Question 5

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

Accepted Answer

A)  the inflation rate decreases. 
B)  the government increases its expenditures. 
C)  the Fed increases the money supply. 
D)  None of the above is correct. 
A)  the inflation rate decreases. 
B)  the government increases its expenditures. 
C)  the Fed increases the money supply. 
D)  None of the above is correct.

Question 6

The natural rate of unemployment

Accepted Answer

A)  is constant over time. 
B)  varies over time, but can't be changed by the government. 
C)  is the unemployment rate that the economy tends to move to in the long run. 
D)  depends on the rate at which the Fed increases the money supply. 
A)  is constant over time. 
B)  varies over time, but can't be changed by the government. 
C)  is the unemployment rate that the economy tends to move to in the long run. 
D)  depends on the rate at which the Fed increases the money supply.

Question 7

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Accepted Answer

A)  the natural rate of unemployment and monetary growth. 
B)  the natural rate of unemployment, but not monetary growth. 
C)  monetary growth, but not the natural rate of unemployment. 
D)  neither monetary growth nor the natural rate of unemployment. 
A)  the natural rate of unemployment and monetary growth. 
B)  the natural rate of unemployment, but not monetary growth. 
C)  monetary growth, but not the natural rate of unemployment. 
D)  neither monetary growth nor the natural rate of unemployment.

Question 8

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Accepted Answer

A)  The short-run Phillips curve would shift to the left. 
B)  The short-run Phillips curve would shift to the right. 
C)  The economy would move up and to the left along a given short-run Phillips curve. 
D)  The economy would move down and to the right along a given short-run Phillips curve. 
A)  The short-run Phillips curve would shift to the left. 
B)  The short-run Phillips curve would shift to the right. 
C)  The economy would move up and to the left along a given short-run Phillips curve. 
D)  The economy would move down and to the right along a given short-run Phillips curve.

Question 9

Other things the same, if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

Accepted Answer

A) True 
 B)False

Question 10

If the natural rate of unemployment falls,

Accepted Answer

A)  both the short-run and long-run Phillips curves shift left. 
B)  the short-run Phillips curve shifts left, the long-run Phillips curve is unchanged. 
C)  the short-run Phillips curve is unchanged, the long-run Phillips curve shifts right. 
D)  the short-run and the long-run Phillips curves shift right. 
A)  both the short-run and long-run Phillips curves shift left. 
B)  the short-run Phillips curve shifts left, the long-run Phillips curve is unchanged. 
C)  the short-run Phillips curve is unchanged, the long-run Phillips curve shifts right. 
D)  the short-run and the long-run Phillips curves shift right.

Question 11

Which of the following would reduce the natural rate of unemployment?

Accepted Answer

A)  both an increase in the rate of money growth and increased unemployment compensation 
B)  an increase in the rate of money growth but not increased unemployment compensation 
C)  an increase in unemployment compensation but not an increase in the rate of money growth. 
D)  neither an increase in unemployment compensation nor an increase in the rate of money growth. 
A)  both an increase in the rate of money growth and increased unemployment compensation 
B)  an increase in the rate of money growth but not increased unemployment compensation 
C)  an increase in unemployment compensation but not an increase in the rate of money growth. 
D)  neither an increase in unemployment compensation nor an increase in the rate of money growth.

Question 12

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

Accepted Answer

A)  lowers both inflation and unemployment. 
B)  lowers inflation but raises unemployment. 
C)  raises inflation but lowers unemployment. 
D)  raises both inflation and unemployment. 
A)  lowers both inflation and unemployment. 
B)  lowers inflation but raises unemployment. 
C)  raises inflation but lowers unemployment. 
D)  raises both inflation and unemployment.

Question 13

Figure 17-1. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, U represents the unemployment rate.
  
-Refer to Figure 17-1. Assuming the price level in the previous year was 100, point G on the right-hand graph corresponds to

Accepted Answer

A)  point A on the left-hand graph. 
B)  point B on the left-hand graph. 
C)  point C on the left-hand graph. 
D)  point D on the left-hand graph. 
A)  point A on the left-hand graph. 
B)  point B on the left-hand graph. 
C)  point C on the left-hand graph. 
D)  point D on the left-hand graph.

Question 14

Samuelson and Solow argued that a combination of low unemployment and low inflation

Accepted Answer

A)  was impossible given the historical data as summarized by the Phillips curve. 
B)  could be achieved with an "appropriate" fiscal policy. 
C)  could be achieved with an "appropriate" monetary policy. 
D)  could be achieved with an "appropriate" mix of monetary and fiscal policies. 
A)  was impossible given the historical data as summarized by the Phillips curve. 
B)  could be achieved with an "appropriate" fiscal policy. 
C)  could be achieved with an "appropriate" monetary policy. 
D)  could be achieved with an "appropriate" mix of monetary and fiscal policies.

Question 15

In the 1970s, the Fed accommodated a(n)

Accepted Answer

A)  adverse supply shock and so contributed to higher inflation. 
B)  adverse supply shock and so contributed to lower inflation. 
C)  favorable supply shock and so contributed to higher inflation. 
D)  favorable supply shock and so contributed to lower inflation. 
A)  adverse supply shock and so contributed to higher inflation. 
B)  adverse supply shock and so contributed to lower inflation. 
C)  favorable supply shock and so contributed to higher inflation. 
D)  favorable supply shock and so contributed to lower inflation.

Question 16

The government of Murkland considers two policies. Policy A would shift AD right by 300 units while policy B would shift AD right by 200 units. According to the short-run Phillips curve, policy A will lead

Accepted Answer

A)  to a lower unemployment rate and a lower inflation rate than policy B. 
B)  to a lower unemployment rate and a higher inflation rate than policy B. 
C)  to a higher unemployment rate and lower inflation rate than policy B. 
D)  to a higher unemployment rate and higher inflation rate than policy B. 
A)  to a lower unemployment rate and a lower inflation rate than policy B. 
B)  to a lower unemployment rate and a higher inflation rate than policy B. 
C)  to a higher unemployment rate and lower inflation rate than policy B. 
D)  to a higher unemployment rate and higher inflation rate than policy B.

Question 17

Which of the following is downward-sloping?

Accepted Answer

A)  both the long-run Phillips curve and the short-run Phillips curve 
B)  neither the long-run Phillips curve nor the short-run Phillips curve 
C)  the long-run Phillips curve, but not the short-run Phillips curve 
D)  the short-run Phillips curve, but not the long-run Phillips curve 
A)  both the long-run Phillips curve and the short-run Phillips curve 
B)  neither the long-run Phillips curve nor the short-run Phillips curve 
C)  the long-run Phillips curve, but not the short-run Phillips curve 
D)  the short-run Phillips curve, but not the long-run Phillips curve

Question 18

In the short run,

Accepted Answer

A)  unemployment and inflation are positively related. In the long run they are largely unrelated problems. 
B)  and in the long run inflation and unemployment are positively related. 
C)  unemployment and inflation are negatively related. In the long run they are largely unrelated problems. 
D)  and in the long run inflation and unemployment are negatively related. 
A)  unemployment and inflation are positively related. In the long run they are largely unrelated problems. 
B)  and in the long run inflation and unemployment are positively related. 
C)  unemployment and inflation are negatively related. In the long run they are largely unrelated problems. 
D)  and in the long run inflation and unemployment are negatively related.

Question 19

In the long run, a decrease in the money supply growth rate

Accepted Answer

A)  increases inflation and shifts the short-run Phillips curve right. 
B)  increases inflation and shifts the short-run Phillips curve left. 
C)  decreases inflation and shifts the short-run Philips curve right. 
D)  decreases inflation and shifts the short-run Phillips curve left. 
A)  increases inflation and shifts the short-run Phillips curve right. 
B)  increases inflation and shifts the short-run Phillips curve left. 
C)  decreases inflation and shifts the short-run Philips curve right. 
D)  decreases inflation and shifts the short-run Phillips curve left.

Question 20

Suppose expected inflation and actual inflation are both relatively high, and unemployment is at its natural rate. If the Fed then pursues a contractionary monetary policy, which of the following results would be expected in the short run?

Accepted Answer

A)  Expected inflation would exceed actual inflation, and unemployment would exceed its natural rate. 
B)  Expected inflation would exceed actual inflation, and unemployment would be below its natural rate. 
C)  Actual inflation would exceed expected inflation, and unemployment would exceed its natural rate. 
D)  Actual inflation would exceed expected inflation, and unemployment would be below its natural rate. 
A)  Expected inflation would exceed actual inflation, and unemployment would exceed its natural rate. 
B)  Expected inflation would exceed actual inflation, and unemployment would be below its natural rate. 
C)  Actual inflation would exceed expected inflation, and unemployment would exceed its natural rate. 
D)  Actual inflation would exceed expected inflation, and unemployment would be below its natural rate.

Which of the following shifts aggregate supply to the right?

Moving from the late 1960s to 1970-1973,

The restrictive monetary policy followed by the Fed in the early 1980s

The long-run Phillips curve would shift left if

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

The natural rate of unemployment

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Other things the same, if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

If the natural rate of unemployment falls,

Which of the following would reduce the natural rate of unemployment?

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

Samuelson and Solow argued that a combination of low unemployment and low inflation

In the 1970s, the Fed accommodated a(n)

The government of Murkland considers two policies. Policy A would shift AD right by 300 units while policy B would shift AD right by 200 units. According to the short-run Phillips curve, policy A will lead

Which of the following is downward-sloping?

In the short run,

In the long run, a decrease in the money supply growth rate

Suppose expected inflation and actual inflation are both relatively high, and unemployment is at its natural rate. If the Fed then pursues a contractionary monetary policy, which of the following results would be expected in the short run?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Six Debates Over Macroeconomic Policy

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Exam 17: The Short-Run Trade-Off Between Inflation and Unemployment

Which of the following shifts aggregate supply to the right?

Moving from the late 1960s to 1970-1973,

The restrictive monetary policy followed by the Fed in the early 1980s

The long-run Phillips curve would shift left if

The economy will move to a point on the short-run Phillips curve where unemployment is higher if

The natural rate of unemployment

The position of the long-run Phillips curve and the long-run aggregate supply curve both depend on

Suppose expected inflation and actual inflation are both low, and unemployment is at its natural rate. If the Fed then pursues an expansionary monetary policy, which of the following results would be expected in the short run?

Other things the same, if the Fed increases the rate at which it increases the money supply then the short-run Phillips curve shifts right in the long run.

If the natural rate of unemployment falls,

Which of the following would reduce the natural rate of unemployment?

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

Samuelson and Solow argued that a combination of low unemployment and low inflation

In the 1970s, the Fed accommodated a(n)

The government of Murkland considers two policies. Policy A would shift AD right by 300 units while policy B would shift AD right by 200 units. According to the short-run Phillips curve, policy A will lead

Which of the following is downward-sloping?

In the short run,

In the long run, a decrease in the money supply growth rate

Suppose expected inflation and actual inflation are both relatively high, and unemployment is at its natural rate. If the Fed then pursues a contractionary monetary policy, which of the following results would be expected in the short run?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Six Debates Over Macroeconomic Policy

Filters